The Future of Electricity Retailing and How We Get There

Wolak, Frank A.; Hardman, Ian H.

doi:10.1007/978-3-030-85005-0

Cited by 1 publication

(1 citation statement)

References 13 publications

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“…In such a context, other, more complicated, retail rate plans may need to be developed. Examples of such ideas are having consumers hedge part of their load while real-time deviations from the contracted capacity are settled at spot prices (Chao, 2011;Wolak and Hardman, 2020) or the introduction of an insurance mechanism that accompanies the passed-through spot prices to consumers ¬ see e.g., Batlle et al (2022aBatlle et al ( , 2022b. The cost of the insurance could be a function of the extent to which load control is granted by the consumer to the insurance provider.…”

Section: Discussionmentioning

confidence: 99%

Electricity Retail Rate Design in a Decarbonizing Economy: An Analysis of Time-of-use and Critical Peak Pricing

Schittekatte¹,

Mallapragada²,

Joskow³

et al. 2024

The Energy Journal

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Currently, the main component of most U.S. consumers’ electricity bills is based on a constant price per kWh consumed. As intermittent renewable resources and flexible loads that can be shifted within days (such as electric vehicle charging) gain prominence in the electricity system, the efficiency gains to be realized from basing bills instead on wholesale spot prices increase. There is little political support for this change, however. We focus on second-best alternatives: time-of-use (TOU) rates and critical peak pricing (CPP). We introduce alternative assessment criteria that focus on intra-day load shifting. Using historical data, we find that TOU rates can reasonably replicate the intra-day load-shifting incentives provided under spot pricing. Thus, TOU rates, especially when complemented with CPP involving load control during infrequent scarcity price events, can be considerably more socially valuable than previously estimated.

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